Insurance M&A activity at highest level for two years – PwC | Online only

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Value of insurance deals accounts for over half of all financial services transactions

Research from PwC has revealed that European insurance mergers and acquisitions (M&As) have reached their highest levels for two years.

The value of M&As over the first half of 2013 totalled €1.6bn (£1.3bn), up from €344.6m for the same period in 2012.

This means that the value of insurance M&A activity accounted for over half (52%) of all financial services M&As over the first six months of 2013 (see graph below). This is despite the number of deals only accounting for 23% of all deals.

PwC UK insurance leader Jonathan Howe said: “The headline value of €1.6bn is a huge improvement on 2012’s figure of €344.6m, and although much of this significant increase is down to a small number of big deals in a thin market, it suggests that insurance deal activity in the UK has begun to grow again. From a Europe-wide perspective, it is encouraging that the period saw insurance deal values reach their highest level in two years.”

And Howe said the London market was proving particularly fruitful for M&A activity.

“The London market has generated a lot of M&A activity over the past year, and Lloyd’s vehicles continue to attract bids,” he said. “High returns and genuine diversification provide further reasons for this deal appetite. The exposure of Lloyd’s vehicles is generally uncorrelated with other risks giving investors the diversification they are looking for, particularly in the current environment. This is combined with the fact that many Lloyd’s vehicles have generated high returns on investment in recent years, making the market very attractive.”

PwC expects the outlook for M&As to remain positive, with Howe predicting a busy second half of 2013: “The prospects for the rest of 2013 look set to be bolstered by a more positive business environment. Lloyd’s vehicles look set to continue to attract bids from a range of potential buyers keen to enter the London market. We would predict a rise in investors from other markets globally, as well as private equity investors,” he said.